A family budget is a delicate thing to balance, even without a pandemic crashing in and jumbling your finances.
In uncertain times like these — with the country dealing with an uneven economic recovery, rising inflation, stubbornly high unemployment and worrisome COVID variants — you need to keep yourself armed with extra financial tools to protect your household from potential money troubles.
Here’s an eight-point battle plan to harden your family’s financial defenses, starting today.
1. Clear as much debt as you can
Paying down debt may be the most effective way to protect your household’s finances — especially if high-interest debts like credit cards are draining more of your cash each month.
So long as your credit score is in decent shape, you should consider rolling your various high-cost balances into a single debt consolidation loan with a lower interest rate.
That will make your debt more affordable and help you clear it more quickly — to give your budget some breathing room.
You can quickly compare loan offers from multiple lenders online, to find the best interest rate possible.
2. Stop up the leaks in your budget
The pandemic forced many of us to cut back, whether we wanted to or not. But you may still be leaking money out of your family budget if you’re ignoring basic ways to save.
Plug those holes by looking for the better deals that are out there.
You can save money every time you shop online if you download a free browser extension that instantly searches for lower prices and coupon codes.
With a little comparison shopping, homeowners may be able to cut the cost of home insurance by hundreds of dollars a year. And, shop around for your car insurance each time your policy comes up for renewal, because you might easily be overpaying.
3. Refinance your mortgage
Want to make a serious dent in your monthly expenses? If you’re a homeowner and haven’t refinanced yet, it’s long past time.
Thanks to the rock-bottom interest rates that were ushered in by the pandemic, more than 14 million homeowners still have the potential to cut their monthly payments by nearly $300, the mortgage data and technology firm Black Knight recently said.
Yet a Zillow survey found 78% of homeowners never refinanced over the last year of jaw-droppingly low mortgage rates. If you have a solid credit score and at least 20% equity in your home, you should refi at one of today’s historically cheap rates while you still can. Forecasters say rates will rise later in the year.
Mortgage rates can vary widely from one lender to the next, so shop around and compare a minimum of five quotes to find the most attractive rate in your area for a person with your credit profile.
4. Protect your family with life insurance
It’s not something people want to think about, but this is one of the big ones. Just imagine how hard it would be for your loved ones to get by without the money you bring in.
Even if your finances seem precarious right now, consider using a small amount of money to open a life insurance policy. Because life is uncertain and fragile, as COVID-19 has demonstrated.
Term life insurance — which covers you for a set number of years — can cost less than $1 a day, and the payout to your family will always be tax-free.
Use a website that will help you review policies side by side, so you can find the best price for coverage that fits your family’s needs.
5. Pad your emergency fund
It’s important to stay nimble for any crisis, and that means having cash on hand that you can use for anything.
Your rainy-day money can bail you out if you suffer a sudden layoff or an unexpected medical bill. There’s no secret formula, but financial experts suggest saving enough to cover three to six months’ worth of regular expenses.
Once you begin to build your emergency fund, stash it in a high-yield savings account. You’ll have instant access to your cash when you need it, and in the meantime you’ll earn more interest than you would with a traditional savings account.
6. Talk with a pro
You don’t need to be wealthy to hire a financial adviser. Everyone could use a little help.
These days you can work with a certified financial planner online and at an affordable price to help you guard your family’s finances now and into the future.
A financial professional will customize a plan for you, whether you’re just starting your family or are enjoying retirement.
7. Guard your income against illness and injury
Americans had to think about their health much more than usual over the last year, but it should be a consideration in any financial plan.
A serious illness like COVID isn’t the only thing that could stop you from working and earning a living, but many people aren’t covered for long-term disability through their jobs.
One affordable way to protect your income and your family is by purchasing your own disability insurance. Policies that cost just pennies a day will provide a stream of income in the event you can’t work.
You can get a quote in seconds and be covered in 15 minutes. It’s easy — and too important to ignore.
8. Don’t fuss with your investments
After a long period of stability, the stock market was tossed into disarray by the COVID-19 pandemic. It has been a volatile time to be an investor, to be sure.
Lately, stocks have been hitting new all-time highs, but analysts say the market is due for a “correction,” which means a drop of 10% or more. Instead of stressing out, just accept the situation and remember that — for most people — investing is all about taking the long view.
If you need help managing your investments in an unstable market, consider using a robo-advisor that will automatically adjust your portfolio to any dramatic changes over the next few months — so you don’t have to.
You want to see your money grow over time for your retirement and other big goals. One fairly effortless way to earn additional returns in the market is by downloading a popular app that helps you build a diversified portfolio just by investing “spare change” from your everyday purchases.
